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4 Factors That Will Help People Buy Their First Home

4 factors that will help people buy their first home

Money is the major issue that stands in the way of first-time homebuyers. A survey reveals that nearly 80% of millennial renters want to buy a home, but most of them cannot afford it. Many first-time homebuyers do not realize that there are various grants and programs offer financial help, and they may also be eligible for other assistance programs.

4 Factors That Will Help People Buy Their First Home
Along with information about financial aid, this article also gives additional information about buying a home at low mortgage rates and tax benefits on home loan repayment.

What are the grants and programs offered?
Here is the list of grants and programs for first-time homebuyers designed to help people get a great mortgage and buy their dream home.

  • FHA loan: The Federal Housing Administration insures this mortgage. The FHA is a bureau under the U.S. Department of Housing and Urban Development. It provides complete coverage and offers a layer of protection. FHA loans come with the best interest rates, and lower down payments and closing costs than conventional loans. A potential homebuyer should have a credit score of 580 or above to be eligible for an FHA loan. Buyers with lower credit levels are also eligible for the mortgage but the down payment would be a minimum of 10% of the mortgage amount.
  • USDA loan: The U.S. Department of Agriculture offers a financial assistance program for first-time homebuyers. USDA is not well known among borrowers. You can easily avail this mortgage if you are planning to buy a house in a rural area. Additionally, you need not run a farm to be eligible for this loan. The USDA does not require any down payment and guarantees a home loan with fixed loan rates. Applicants with a credit score of 640 and above can get the loan approved through a streamlined process. Homebuyers who have a credit score that is lesser than 640 may have to submit payment history documents.
  • Good Neighbour Next Door program: The U.S. Department of Housing and Urban Development (HUD) funds this program. It provides housing assistance to firefighters, law enforcement officers, pre-kindergarten to 12th-grade teachers, and medical technicians. This program covers about 50% of the amount on a home’s listed price in places known as revitalization areas. You can make use of the program’s website to find properties available in your area.
  • VA loan: Veterans, active duty military members, and surviving spouses get funds to buy homes from the U.S. Department of Veterans Affairs. The VA lenders promise to pay a part of the loan, making it possible for them to provide special offers. They require no down payment and come with unimaginable interest rates. You need to hold a decent credit score to become eligible for the loan, and they require you to pay for private mortgage insurance. If you cannot make a mortgage payment, the VA agents would negotiate with the lender on your behalf.

What are some grants offered by the government?

  • Fannie Mae and Freddie Mac are two government-funded bodies.
  • They work with local mortgage providers to offer loan options that benefit low and moderate-income families.
  • Banking with Fannie Mae and Freddie Mac, first-time homebuyers can get a loan at competitive interest rates, and get a down payment option as low as 3 percent of the purchase price.
  • Fannie Mae also educates first-time homebuyers by offering HomePath Ready Buyer™ program. Upon completing this course, homebuyers are eligible for a 3% closing cost assistance.

What are some local grants and programs available for first-time homebuyers?

  • To be on the safer side, it is always good to apply for a mortgage at the federal government bank.
  • There are additional grants and programs provided by various state and cities to help first-time homebuyers.
  • Grants and programs vary from state to state.
  • Before approaching the bank, check the state’s community website for details on housing grants and programs provided in your area.

What are the additional benefits buyers can claim on loans?

  • First-time homebuyers can claim tax benefits for the interest they are paying.
  • Making principal repayment also helps in tax deduction.
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